Regional Housing Legal Services

Transcription

1 Regional Housing Legal Services Financial Statements and Supplementary Information Years Ended June 30,2013 and 2012 with Independent Auditor's Reports

2 YEARS ENDED JUNE 30, 2013 AND 2012 TABLE OF CONTENTS Independent Auditor's Report Financial Statements: Statements of Financial Position Statement of Activities- Year Ended June 30, 2013 Statement of Activities- Year Ended June 30, 2012 Statement of Functional Expenses- Year Ended June 30,2013 Statement of Functional Expenses- Year Ended June 30,2012 Statements of Cash Flows Notes to Financial Statements I Supplementary Information: Schedule of Revenues and Other Support, Expenses, and Changes in Net Assets by Primary Funding Sources - Legal Services for Housing and Community Development Schedule of Revenues and Other Support, Expenses, and Changes in Net Assets by Primary Funding Sources - Pennsylvania Utility Law Project Independent Auditor's Report in Accordance with Government Auditing Standards: Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 19

3 MaherDuessel Certified Public Accountants Pinsburgh 503 Martindale Street Suite 600 Pittsburgh, PA Main Fax Harrisburg 3003 North Front Street Suite 101 Harrisburg, PA Main Fax Buder 112 Hollywood Drive Suite 204 Butler, PA Main Fax The Board of Directors Regional Housing Legal Services Independent Auditor's Report Report on the Financial Statements We have audited the accompanying financial statements of Regional Housing Legal Services (RHLS) (a nonprofit organization), which comprise the statement of financial position as of June 30, 2013, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements. Management's Responsibility for tlte Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, this includes the design, implementation, and maintenance of internal control relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud orenor. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Pursuing the profession while promoting the public good

4 The Board of Directors Regional Housing Legal Services Independent Auditor's Report Page 2 of2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position ofrhls as of June 30, 2013, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Prior Auditor's Repmt The financial statements of RHLS as of June 30, 2012 were audited by other auditors whose report, dated October 16, 2012, expressed an unqualified opinion on those statements. Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The Schedules of Revenues and Other Support, Expenses, and Changes in Net Assets by Primary Funding Sources, as listed in the table of contents, are presented for pmposes of additional analysis and are not a required pmt of the financial statements. Such information is the responsibility of mm1agement and was derived from and relates to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and cettain additional procedures, including comparing and reconciling such infmmation directly to the underlying accounting and other records used to prepme the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 9, 2013, on our consideration ofrhls's internal control over financial reporting and on our tests of its compliance with cettain provisions of laws, regulations, contracts, and grant agreements and other matters. The pmpose of that repmt is to describe the scope of our testing of internal control over financial repmting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That repmt is an integral part of an audit performed in accordance with Government Auditing Standards in considering RHLS's intemal control over financial reporting and compliance. Harrisburg, Pennsylvania October 9, 2013

5 STATEMENTS OF FINANCIAL POSITION Assets JUNE 30, 2013 AND Cash and cash equivalents $ 337,249 $ 430,035 Accounts receivable: Pennsylvania Legal Aid Network 43,362 46,922 Other receivables 426, ,953 Promises to give 508, ,229 Prepaid expenses 39,911 62,606 Property and equipment 500 Total Assets $ 1,356,473 $ 1,673,245 Liabilities and Net Assets Liabilities: Accounts payable and accrued expenses $ 28,684 $ 23,063 Total Liabilities 28,684 23,063 Net Assets: Unrestricted 570, ,049 Temporarily restricted 757,017 1,099,133 Total Net Assets 1,327,789 1,650,182 Total Liabilities and Net Assets $ 1,356,473 $ 1,673,245 The accompanying notes are an integral patt of these financial statements.

6 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, Unrestricted Temporarily Restricted Housing and Pennsylvania Housing and Pennsylvania Community Utility Law Community Utility Law Development Project Total Development Project Total Total Revenue and Support: Purely public charities $ 987,110 $ 285,138 $ 1,272,248 $ 210,115 $ 32,922 $ 243,037 $ 1,515,285 Corporations Foundations 154, , , , ,442 Individuals 108, , ,724 In-kind contributions 12,098 10,395 22, ,493 Interest income Other revenue 7,374-7,374 4,900 4,900 12,274 Subtotal 1,270, ,596 1,566, ,751 32, ,673 1,957,739 Net assets released from restrictions 731,489 2, ,789 (731,489) (2,300) (733,789) Total revenue and support 2,001, ,896 2,299,855 (372,738) 30,622 (342,116) 1,957,739 Expenses: Program services 1,647, ,989 1,918, ,918,170 Management and general 269,530 25, , ,187 Fundraising 65,525 1,250 66, ,775 Total expenses 1,982, ,896 2,280,132 2,280,132 Change in Net Assets 19,723-19,723 (372,738) 30,622 (342,116) (322,393) Net Assets: Beginning of year 551, ,049 1,096,833 2,300 1,099,133-1,650,182 End of year $ 570,772 $ - $ 570,772 $ 724,095 $ 32,922 $ 757,017 $ 1,327,789 The accompanying notes are an integral part of these financial statements. 2

7 STATEJ\1ENT OF ACTIVITIES YEAR ENDED JUNE 30, Unrestricted Temporarily Restricted Housing and Pennsylvania Housing and Pennsylvania Community Utility Law Community Utility Law Development Project Total Development Project Total Total Revenue and Support: Purely public charities $ 787,685 $ 276,615 $ 1,064,300 $ 111,675 $ 2,300 $ 113,975 $ 1,178,275 Corporations 73,781-73,781 30,219 30, ,000 Foundations 535,205 6, , , ,440 1,458,735 Individuals 11,138-11, ,138 In-kind contributions 1,800 1, ,800 Interest income Other revenue 2,510 2,510-2,510 Subtotal 1,410, ,722 1,695,554 1,059,334 2,300 1,061,634 2,757,188 Net assets released from restrictions 192,067 54, ,398 (192,067) (54,331) (246,398) Total Revenue and Support 1,602, ,053 1,941, ,267 (52,031) 815,236 2,757,188 Expenses: Program services 1,336, ,054 1,649,274-1,649,274 Management and general 214,066 40, , ,321 Fundraising 52,611 1,238 53, ,849 Total expenses 1,602, ,547 1,957,444-1,957,444 Change in Net Assets 2 (15,494) (15,492) 867,267 (52,031) 815, ,744 Net Assets: Beginning of year 551,047 15, , ,566 54, , ,438 End of year $ 551,049 $ $ 551,049 $ 1,096,833 $ 2,300 $ 1,099,133 $ 1,650,182 The accompanying notes are an integral part of these financial statements, 3

8 STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, Program Services Housing and Pennsylvania Community Utility Law Management Fund- Development Project Total and General raising Total Expenses: Salaries $ 1,009,217 $ 206,037 $ 1,215,254 $ 180,160 $ 26,678 $ 1,422,092 Fringe benefits 268,669 31, ,796 46,293 7, ,204 Consultants and contractors 136,248 13, ,506 31,281 25, ,159 Travel 24,597 2,528 27,125 5, ,243 Space costs 63,257 10,179 73,436 10,905 1,460 85,801 Consumable supplies 16,043 1,621 17,664 2, ,767 Equipment-related expense 44,585-44, ,585 Other 84,065 6,239 90,304 18,831 5, ,781 Total expenses before depreciation 1,646, ,989 1,917, ,187 66,775 2,279,632 Depreciation and amortization Total expenses $ 1,647,181 $ 270,989 $ 1,918,170 $ 295,187 $ 66,775 $ 2,280,132 The accompanying notes are an integral part of these financial statements. 4

9 STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, Program Services Housing and Pennsylvania Community Utility Law Management Fund- Development Project Total and General ratsmg Total Expenses: Salaries $ 852,980 $ 225,735 $ 1,078,715 $ 157,731 $ 23,628 $ 1,260,074 Fringe benefits 249,372 61, ,711 45,424 6, ,118 Consultants and contractors 82,936 4,534 87,470 14,232 22, ,286 Travel 29,639 2,910 32,549 6,610-39,159 Space costs 62,586 12,094 74,680 10, ,538 Consumable supplies 10, ,703 1, ,585 Equipment-related expense 10,039-10, ,039 Other 37,610 6,160 43,770 17, ,895 Total expenses before depreciation 1,335, ,054 1,648, ,225 53,832 1,956,694 Depreciation and amortization Total Expenses $ 1,336,220 $ 313,054 $ 1,649,274 $ 254,321 $ 53,849 $ 1,957,444 The accompanying notes are an integral part of these financial statements. 5

10 STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2013 AND Cash Flows From Operating Activities: - Cash received from contracts, grants and contributions $ 2,123,242 $ 1,996,938 Interest received Other income received 12,274 2,508 Cash paid to employees and related fringe benefits (1,775,296) (1,621,391) Cash paid for other expenses (453,527) (38!,862) Net cash used in operating activities (92,786) (3,077) Net Decrease in Cash and Cash Equivalents (92,786) (3,077) Cash and Cash Equivalents: Beginning of year 430, ,112 Ending of year $ 337,249 $ 430,035 Reconciliation of Change in Net Assets to Net Cash Flows From Operating Activities: Change in net assets $ (322,393) $ 799,744 Adjustments to reconcile change in net assets to net cash provided used in operating activities: Depreciation and amortization (Increase) decrease in: Accounts receivable 123,528 (168,981) Promises to give 77,263 (586,229) Prepaid expenses 22,695 (7,535) Increase (decrease) in: Accounts payable and accrued expenses 5,621 (40,826) Net Cash Used in Operating Activities $ (92,786) $ (3,077) The accompanying notes are an integral part of these financial statements. 6

11 NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30,2013 AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Regional Housing Legal Services (RHLS) is a nonprofit corporation organized to build more self-sufficient communities by providing legal services and technical assistance to clients who develop affordable housing and engage in neighborhood revitalization and economic development activities throughout Pennsylvania. RHLS is part of a network of separate organizations, each with its own management team servicing all of Pennsylvania's 67 counties. RHLS represents its targeted clients in matters relating to the development of affordable housing with support from discretionary government funding, the philanthropic community and volunteer services or attorneys, and others. RHLS receives funding from Pennsylvania Legal Aid Network (PLAN) (formerly Pennsylvania Legal Services) and other foundations and government grants. Basis of Accounting The financial statements of RHLS have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables, and other liabilities. RHLS recognizes contract revenue received as unrestricted support to the extent that eligible costs are incurred and as temporarily restricted support to the extent that eligible costs have yet to be incurred or additional time restrictions apply. Basis of Presentation Net assets and revenues, expenses, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of RHLS and changes therein are classified and repotted as follows: Umestricted- Net assets that are not subject to donor-imposed stipulations. Temporarily restricted- Net assets subject to donor-imposed stipulations that may or will be met either by actions of RHLS and/or the passage oftime. Permanently restricted - Net assets subject to donor-imposed stipulations that they be maintained permanently by RHLS. Management's Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the repotted amounts of assets and liabilities and disclosure of 7

12 NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the repmiing period. Actual results could differ from those estimates. In-Kind Contributions In-kind contributions are recorded at fair market value at the time of receipt. The contributions are recognized as both support and expenses in the Statement of Activities. Only those services that create or enhance non-financial assets, require skills, and are provided by such individuals possessing those skills, and would typically need to be purchased, if not by donation, are recognized in the financial statements. In-kind contributed services totaled $22,493 and zero for the years ended June 30, 2013 and 2012, respectively, and consisted of pro-bono legal services. The legal fees are recorded at attorney's cost, based on the market rate of the attorney providing legal services. Exchange Transactions Services to other legal services and housing organizations and contracts directly with governmental entities that are unrestricted reciprocal transfers are accounted for as exchange transactions. Revenue is recorded as eamed and an allowance for uncollectibility against receivables is considered if there is an indication that the organization is unable to pay for services rendered. The receivable would be written off after collection effmis have been exhausted. No allowance was deemed warranted at June 30, 2013 and Expense Allocation The costs of providing services have been summarized on a functional basis in the Statement of Activities and in the Statement of Functional Expenses. Accordingly, certain costs have been allocated to the program and suppmi services benefited. Income Tax Status RHLS is exempt from federal income taxes under Section 50l(c)(3) of the Internal Revenue Service Code. In addition, RHLS qualifies for the charitable contribution deduction under Section 170(b )(1 )(A) and has been classified as an organization other than a private foundation. Fmiher, RHLS annually files a Form 990, which is subject to examination by the Internal Revenue Service generally for three years after it is filed. 8

13 NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Cash and Cash Equivalents For purposes of the Statement of Cash Flows, RHLS considers all unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents. RHLS maintains a separate interest-bearing checking account for funding received from the Pennsylvania Interest on Lawyers' Trust Accounts (IOLTA) through PLAN, as required by policy enacted by the Pennsylvania IOLTA Board effective November 1, Promises to Give Unconditional promises to give are recognized as revenues or gains in the period received and as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Conditional promises to give are recognized only when the conditions on which they depend are substantially met and the promises become unconditional. Property and Equipment All acquisitions of property and equipment in excess of $5,000 and all expenditures for repairs, maintenance, renewals, and betterments that materially prolong the useful lives of assets are capitalized. Property and equipment are carried at cost. Depreciation is computed using the straight-line method. Concentration of Grants RHLS is funded on a year-to-year basis through a contract with PLAN. For the years ended June 30, 2013 and 2012, approximately 43% and 27%, respectively, ofrhls's funding was received from PLAN. Funding for the contract is provided for by the Commonwealth of Pennsylvania Department of Public Welfare (DPW) with Commonwealth and Federal Title XX funds, IOL T A and by other non-dpw public and private sources. RHLS also receives funding from various foundations. Restricted and Umestricted Revenue and Support Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the suppott is recognized. All other donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to umestricted net assets and reported in the Statements of Activities as net assets released from restrictions. 9

14 NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30,2013 AND 2012 Funding Source Expense Allocation RHLS allocates expenses among PLAN and other funding sources. The allocation of expenses among funding sources is based on a timekeeping system for personnel costs and allocation of common expenses based on the relative persounel cost base. The funding source expense allocation is summarized on the Schedule of Revenues and Other Support, Expenses, and Changes in Net Assets by Primary Funding Sources included in supplementary information. Subsequent Events Subsequent events have been evaluated through the Independent Auditor's Report date, which is the date the financial statements were available to be issued. 2. PROMISES TO GIVE As of June 30, 2013 and 2012, RHLS had promises to give totaling $508,966 and $586,229, respectively. The promises to give at June 30, 2013 are expected within one year and are reported at net realizable value. 3. PROPERTY AND EQUIPMENT As of June 30, 2013 and 2012, property and equipment consist ofthe following: Computers and office equipment $ 67,589 $ 67,589 Leasehold improvements 7,500 7,500 Total 75,089 75,089 Less: accumulated depreciation and ammtization (75,089) (74,589) Total property and equipment $ $ 500 Depreciation and amortization expense applied against support and revenues were $500 and $750 for the years ended June 30, 2013 and 2012, respectively. 10

15 NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND PENSION PLANS RHLS maintains a 403(b) retirement savings plan for all eligible employees. Under the plan, a percentage of the eligible employees' gross wages is contributed to the plan by RHLS. The percentage contributed is based upon the employees' years of service. As of May l, 2011, RHLS established a tax exempt 457(b) "Top Hat" plan for a select group of employees. The purpose of the plan is to provide deferred compensation for these employees. Contributions to the plan can consist of employee and employer contributions. The assets of the plan are subject to creditors ofrhls. Contributions to the plans amount to $94,753 and $81,669 for the years ended June 30, 2013 and 2012, respectively. 5. RELATED PARTY TRANSACTIONS RHLS appoints two members from its Board of Directors to serve on the Board of Directors of Commonwealth Housing Development Corporation (CHDC), which has a total of five board members. As explained in Note 6, CHDC leases the Glenside facilities to RHLS. RHLS is also the guarantor on behalf of CHDC at June 30, 2013 and 2012 in the amounts of $116,784 and $137,606, respectively, for a mmigage on the building in Glenside. RHLS is a beneficiary of a supporting organization, Commonwealth Housing Legal Services (CHLS), whose charitable purpose is to support RHLS and CHDC. The Chief Counsel for RHLS is the Executive Director for CHLS and the two corporations have overlapping board members. For the years ended June 30, 2013 and 2012, RHLS received $200,000 and $169,000 in total pledges from CHLS and, at June 30, 2013 and 2012, had $30,000 and $164,000 due from CHLS, respectively. 6. LEASES AND COMMITMENTS RHLS leases office facilities in Glenside, Pittsburgh, Harrisburg, and Gettysburg, Pennsylvania. The leases hold RHLS responsible for fixed monthly rental payments, plus certain real estate and utility expenses. Total annual rent expense for the years ended June 30, 2013 and 2012 was $70,644 and $72,956, respectively. The office facilities in Glenside, Pennsylvania are leased from Commonwealth Housing Development Corporation (CHDC), a nonprofit organization. The lease is renewable on a month-to-month basis with rent cmtently set at $4,300 per month. Either party may cancel ll

16 NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 the lease by giving the other patty a 90-day notice. Total rent paid to CHDC for the years ended June 30,2013 and 2012 was $51,600 per year. The office facilities in Harrisburg, Pennsylvania are leased from PLAN, a nonprofit organization. The lease is renewable on a year-to-year basis with rent currently set at $597 per month. Either patty may cancel the lease by giving the other patty a 30-day notice. Total rent paid to PLAN for the years ended June 30, 2013 and 2012 was $9,033 and $11,720, respectively. The Pittsburgh and Gettysburg leases are renewable on a month-to-month basis. 7. FUNDING RHLS receives funding from PLAN, the Pennsylvania IOLTA Board and various foundations and corporations such as the Independence Foundation, the Department of Community and Economic Development, and the William Penn Foundation. Funding form IOLTA requires that no more that 10% of the grant be carried over to a subsequent fiscal year. During the current year, RHLS obtained a waiver from the Pennsylvania IOLTA Board to carry over excess amounts of unspent Homeowner Assistance Settlement Act (HASA) funds allocated for the year ended June 30, The waiver was to carry over up to $65,800 of the remaining funding. At June 30, 2013, RHLS carried over $44,490, which is included in temporarily restricted net assets. There was no carry-over at June 30, LINE OF CREDIT RHLS has an unsecured line of credit of $400,000 at 3.5% at June 30, The line was extended in March 2013 and expires November 30, There was no balance on the line of credit at June 30,2013 and CoNCENTRATION of CREDIT RisK Financial instruments, which potentially subject RHLS to concentration of credit risk, consist principally of temporary cash investments. RHLS invests its temporaty cash with several financial institutions. The cash balances m e secured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per financial institution. The balances, at times, may exceed federally insured limits. 12

17 NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND NET ASSETS Net assets as of June 30, 2013 and 2012 consist of the following: Development Project Total Unrestricted net assets $ 570,772 $ $ 570,772 Temporarily restricted net assets Net assets restricted by purpose and time: Independence Foundation 30,000 30,000 PlanMLK 4,900 4,900 Connelly Foundation 50,000 50,000 Oak Foundation 157, ,890 United WayofSE PA 20,000 20,000 Heinz Foundation 251, ,190 Action Housing 56,250 56,250 Project HOME 109, ,375 PLANAJA 24,175 24,175 PLANIOLTA 8,747 8,747 PLAN AJA Foreclosure 44,490 44,490 Total temporarily restricted net assets 724,095 32, ,017 Total net assets $ 1,294,867 $ 32,922 $ 1,327,789 13

18 NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND Housing and Pennsylvania Community Utility Law Development Project Total Unrestricted net assets $ 551,049 $ $ 551,049 Temporarily restricted net assets Net assets restricted by purpose and time: Independence Foundation 59,930 59,930 PlanMLK 2,300 2,300 4,600 Philadelphia Foundation 25,833 25,833 Oak Foundation 291, ,951 United Way of SE PA 39,954 39,954 Heinz Foundation 249, ,771 Falk Foundation 37,500 37,500 Project HOME 109, ,375 PNC Bank 30,219 30,219 William Penn Foundation 250, ,000 Total temporarily restricted net assets 1,096,833 2,300 1,099,133 Total net assets $ 1,647,882 $ 2,300 $ 1,650, CONTINGENCIES Grants received are subject to audit and adjustment by grantor agencies, principally PLAN. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenses which may be disallowed by the grantor caunot be determined at this time, although RHLS expects such amounts, if any, to be immaterial. 14

19 Supplementary Information

20 SCHEDULE OF REVENUES AND OTHER SUPPORT, EXPENSES, AND CHANGES IN NET ASSETS BY PRIMARY FUNDING SOURCES - LEGAL SERVICES FOR HOUSING AND COMMUNITY DEVELOPMENT YEAR ENDED JUNE 30,2013 (With Comparative Totals for the Year Ended June 30, 2012) Pennsylvania Legal Aid Network Federal Access to IOLTA Mortgage Special Totals Title XX State Justice Act IOLTA Foreclosure Total IOLTA Other Revenue and Other Support: Purely public charities $ 136,460 $ 66,514 $ 212,773 $ 69,359 $ 86,579 $ 571,685 $ 43,700 $ 581,840 $ 1,197,225 $ 899,360 Corporations 104,000 Foundations 298, ,442 1,452,645 Individuals 108, ,724 11,138 In-kind contributions 12,098 12,098 Interest income Other revenue 12,274 12,274 2,510 Total revenues and other support 136,460 66, ,876 69,381 86, ,810 43,700 1,013,7!1 1,629,221 2,470,166 Expenses: Salaries: Attorneys 72,177 35, ,100 37,212 25, ,661 33, ,797 1,052, ,591 Support staff 16,826 8,065 16,144 8,9!1 3,446 53,392 87, , ,532 Law students , ,561 3,839 6,400 2,700 Total salaries 89,674 43, ,455 46,488 29, ,614 33, ,899 1,199,513 1,007,823 Fringe benefits: Payroll taxes 6,187 3,031 10,298 3,191 2,237 24,944 2,525 59,146 86,615 72,618 Unemployment tax !17 1,420 3,350 4,770 3,982 Hospitalization insurance 4,051 1,942 7,025 2,145 2,831 17,994 4,271 92, , ,917 Life, accident and disability 1, , , ,605 16,918 15,506 Dental insurance , , ,964 9,653 10,484 Retirement 6,501 3,116 11,275 3,443 2,047 26,382 1,733 55,462 83,577 69,255 Workers' compensation ,343 1,621 2,964 1,908 Total fringe benefits 19,036 9,422 33,428 10,253 7,956 80,095 9, , , ,670 Consultants and contractors: Auditing 1, ,454 5,260 6,714 4,805 Other consultants 5,970 2,862 10,354 3, , , ,073 ll2,389 In-kind services 12,098 12,098 Total consultants and contractors 5,970 2,862 11,614 3, , , ,885 ll7,194 Travel: Employee travel - local , ,419 4,023 4,508 Employee travel- out oftown 1, , ,331 16,618 23,949 28,923 Board meetings ,057 1,539 2,490 Total travel 2,221 1,065 3,852 1, , ,094 29,5ll 35,921 (Continued) 15

21 SCHEDULE OF REVENUES AND OTHER SUPPORT, EXPENSES, AND CHANGES IN NET ASSETS BY PRIMARY FUNDING SOURCES - LEGAL SERVICES FOR HOUSING AND COMMUNITY DEVELOPMENT YEAR ENDED JUNE 30,2013 (With Comparative Totals for the Year Ended June 30, 2012) (Continued) Pennsylvania Legal Aid Network Federal Access to 10LTA Mortgage Special All Totals Title XX State Justice Act 10LTA Foreclosure Total 10LTA Other Space costs: Rent 5,873 2,815 10,186 3,1Il 1,502 23,487 37,825 61,312 61,236 Leasehold improvements 1,000 Utilities ,448 2,796 4,244 4,872 Maintenance 1, , ,341 4,836 9,177 4,920 Total space costs 7,332 3,514 12,716 3,883 1,831 29,276 45,457 74,733 72,028 Consumable supplies: Office supplies 1, , ,818 13,186 19,004 13,584 Total consumable supplies 1, , ,818 13,186 19,004 13,584 Equipment-related expense Equipment leased ,891 3,187 5,078 4,404 Furniture purchases (non-capitalized) ,309 5,870 7,179 Equipment purchases (non-capitalized) 3,394 1,654 5,048 22,649 27,697 Repairs and maintenance ,619 3,012 4,631 4,321 Total equipment-related expense 5,152 2,504 1, ,867 34,718 44,585 8,725 Other expenses: Insurance and bonding 1, , ,440 7,405 I1,845 Il,191 Printing costs ,655 1,575 3,230 Professional dues , ,733 5,724 6,106 Tuition and seminar fees ,559 3,465 3,991 Advertising Law library upkeep and subscriptions , ,982 5,444 8,426 6,121 Telephone , ,818 7,695 11,513 11,192 Postage , ,397 3,691 6,088 2,036 Contribution 8,000 Miscellaneous 1, , ,553 49,611 54,164 2,740 Total other expenses 5,645 2,712 9,808 3,003 1,263 22, , ,980 52,202 Depreciation and amortization Total expenses 136,460 66, ,876 69,381 42, ,320 43,700 1,411,216 1,982,236 1,602,897 Change in Net Assets 44,490 44,490 (397,505) (353,015) 867,269 Net Assets: Beginning of year 1,647,882 1,647, ,613 End of year $ $ $ $ $ 44,490 $ 44,490 $ $ 1,250,377 $ 1,294,867 $ 1,647, (Concluded)

22 SCHEDULE OF REVENUES AND OTHER SUPPORT, EXPENSES, AND CHANGES IN NET ASSETS BY PRIMARY FUNDING SOURCES - PENNSYLVANIA UTILITY LAW PROJECT YEAR ENDED JUNE 30, 2013 (With Comparative Totals for the Year Ended June 30, 2012) Pennsylvania Legal Aid Network Federal Access to Totals Title XX State Justice Act IOLTA Total Other Revenue and Other Support: Purely public charities $ 72,469 $ 35,323 $ 120,634 $ 39,634 $ 268,060 $ 50,000 $ 318,060 $ 278,914 Foundations 6,090 In-kind contributions 10,395 10,395 1,800 Interest income Total revenue and support 72,469 35, ,686 39, ,123 60, , ,021 Expenses: Salaries: Attorneys 53,846 26,247 71,708 22, ,760 29, , ,859 Paralegals 20,392 Support staff 2,081 1,014 2, ,754 9,600 16,354 16,300 Law students 2,300 2,300 2,700 Total salaries 55,927 27,261 74,480 23, ,514 41, , ,251 Fringe benefits: Payroll taxes 4,730 2,306 6,302 2,017 15,355 2,231 17,586 19,956 Unemployment tax ,287 Hospitalization insurance 18,060 Life, accident and disability , ,532 2,295 Dental insurance , ,056 2,856 Retirement 2,854 1,391 3,801 1,217 9,263 1,913 11,176 12,414 Workers 1 compensation T ota1 fringe benefits 8,815 4,295 11,742 3,760 28,612 5,067 33,679 68,448 Consultants and contractors: Auditing 2, ,016 3,016 2,558 Other consultants , ,863 2,734 Pro bono attorneys 10,395 10,395 1,800 Total consultants and contractors , ,379 10,895 16,274 7,092 Travel: Employee travel- local Employee travel- out of town , ,685 3,238 Total travel , ,732 3,238 (Continued) 17

23 SCHEDULE OF REVENUES AND OTHER SUPPORT, EXPENSES, AND CHANGES IN NET ASSETS BY PRIMARY FUNDING SOURCES PENNSYLVANIA UTILITY LAW PROJECT YEAR ENDED JUNE 30, 2013 (With Comparative Totals for the Year Ended June 30, 2012) (Continued) Space costs: Rent Total space costs Consumable supplies: Office supplies Pennsylvania Le~al Aid Network Federal Access to Title XX State Justice Act JOLT A Total 3,526 1,719 2,076 1,107 8,428 3,526 1,719 2,076 1,107 8, ,763 Total consumable supplies ,763 Other expenses: Insurance and bonding , Professional dues Tuition and seminar fees Ill Advertising for employees Law library upkeep and subscriptions , Telephone ,737 1,100 Postage Miscellaneous Total other expenses 2,273 1,108 3, ,373 2,428 Total expenses 72,469 35,323 96,511 30, ,201 62,695 Change in Net Assets 24,175 8,747 32,922 (2,300) Net Assets: Beginning of year 2,300 End of year $ $ $ 24,175 $ 8,747 $ 32,922 $ $ Other 2,640 2,640 Totals ,068 13,510 11,068 13,510 1, , ,255 3, , , ,837 2, ,427 9,801 9, , ,546 30,622 (67,525) 2,300 69,825 32,922 $ 2,300 (Concluded) 18

24 Regional Housing Legal Services Independent Auditor's Report in Accordance with Government Auditing Standards Year Ended June 30, 2013

25 MaherDuessel Certified Public Accountants Pittsburgh 503 Martindale Street Suite 600 Pittsburgh, PA Main Fax Harrisburg 3003 North Front Street Suite 101 Harrisburg, PA Main Fax Butler 112 Hollywood Drive Suite 204 Butler, PA Maiu Fax Independent Auditor's Report on Internal Contml over Financial Repmiing and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards The Board of Directors Regional Housing Legal Services We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Regional Housing Legal Services (RHLS) (a nonprofit organization), which comprise the statement of financial position as of June 30, 2013, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated October 9, Internal Control over Financial Reporting In planning and performing our audit, we considered RHLS's intemal control over financial repmiing (intemal control) to detennine the audit procedmes that are appropriate in the circumstances for the pmpose of expressing om opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness ofrhls's internal control. Accordingly, we do not express an opinion on the effectiveness ofrhls's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Om consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Pursuing the profession while promoting the public gooda 19

26 The Board of Directors Regional Housing Legal Services Independent Auditor's Report on Internal Control over Financial Reporting Compliance and Other Matters As part of obtaining reasonable assurance about whether RI-ILS 's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the dete1mination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be repmted under Government Standards. Purpose of this Report The purpose of this repmt is solely to describe the scope of our testing of intemal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the organization's internal control or on compliance. This repmt is an integral part of an audit performed in accordance with Government Auditing Standards in considering the organization's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Harrisburg, Pennsylvania October 9,